Legal Provisions of Estonia Cryptocurrency Exchange License

Legal Provisions of Estonia Cryptocurrency Exchange License

According to Estonian regulations, crypto exchanges can offer on-ramp and off-ramp operations, allowing users to swap virtual with fiat currency and vice versa. The other category that falls under the legislation allows virtual currency service providers to offer crypto storage services using cold and hot wallets.
The regulatory authorities also require the submission of a business for the coming two years with a clarification over the allocation of capital within the business structure.
A licensed crypto exchange in Estonia must provide guidelines for internal auditing data with annual reports, as well as prepare the corporate KYC and AML protocols in accordance with the license.

Tax Requirements

Businesses that deal with cryptocurrencies in Estonia are not subject to any special or industry-specific taxing requirements. Therefore, an Estonian-licensed crypto exchanger will follow the same tax code and regulations as any locally registered business, according to the Estonian Tax and Customs Board (ETCB).
However, the benefit of starting a virtual currency service provider in Estonia is utilising the regional and global trade agreements to protect your company from double taxation between two different countries. 

Estonia has recently increased the value-added tax from 20% to 22%, applicable from 2024.

Fast Fact

Requirements for The Estonia Crypto Exchange License

The Estonian Financial Intelligence Unit (FIU) is tasked with investigating applicants’ documentation and ensuring full compliance with anti-money laundering practices.

• The applicant’s members, beneficiaries, and managers should not be prosecuted for money laundering or other criminal charges.
• The organisational body, owners and managers must have a proper business reputation, assessed by the authorities based on previous activities and plans.
• The appointed contact person must acquire adequate personal and professional qualifications, experience, and qualities, as well as not having a criminal record.
• Applicant business must have a legal office address in Estonia. In the case of a foreign entity, they must work through a branch located in Estonia.
• The legal compliance team must have contact with the state AML agency, have direct access to the risk portfolio, and provide documentation and reports whenever required. 
• An applying entity must have a bank account provided by a financial institution registered within the Estonian system.

The Process of Getting a Crypto Exchange License in Estonia

A business entity must submit its application electronically through the state portal: https://mtr.ttja.ee/ and include the following details.

• The physical office address in Estonia with the right documentation that proves ownership/lease of the property.
• Contact and personal details of the person in charge of communication, delivering the mentioned service, the PR representatives, the attorney, and the financial transactions’ conductor.
• Guidelines for internal procedures and quality control measures.
• The business owner or beneficiary shareholders’ criminal record(s), identification card(s), positions and duties.
• The corporate bank accounts, including the one registered within the Estonian banking system.
• Detailed information on the crypto assets to be provided by the company.
• Provide proof of funds in euros with a bank statement confirming sufficient funds.
• Business plan for the upcoming two years.
• Name and contact details of internal/external auditing body.
• Description of technical aspects, such as website, platforms, and the technological solutions used and offered by the company.

The crypto exchange license cost includes an application fee of €10,000, and the application process usually takes 60 days. However, depending on the procedures’ complexity, it might take up to 6 months.

Why Do You Need a Crypto Exchange License?

Estonia offers one of the most transparent guidelines for virtual currency services, with clear-cut rules on what’s allowed and what’s not. Additionally, service operations are entitled to 0% taxation imposed on corporations, also known as “double taxation”.
Crypto exchange companies in Estonia benefit from not having to pay annual permit fees, the availability of crypto asset accounting guides, and the highly secure crypto business environment. In fact, Estonian regulators have revoked over 1,800 licenses due to misconduct while remaining one of the largest issuers of crypto permits.

Alternative Crypto License Options

Besides the robustness of Estonia’s permit, there are other crypto exchange licenses for sale that you can get to expand your reach and introduce your services to new markets. Let’s talk about these licenses and how you can get them.